Contribution Pricing

Posted in Marketing and Strategy Terms, Total Reads: 1482

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Definition: Contribution Pricing

Contribution Pricing is a pricing strategy which maximizes the profit coming from a product. In Contribution Pricing, the price of the product is kept on the basis of its contribution to cover the fixed costs it incurs even if to a minimal level. Here the assumption lies in the difference between the product’s price and the number of items sold and the variable costs involved.